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September 19, 2014

Homework Help: Intermediate Accounting

Posted by cyndi on Saturday, December 11, 2010 at 2:43am.

On January 4, 2002, Wynn, Inc., bought 15% of Parr Corporation’s common stock for $60,000. Wynn appropriately accounts for this investment by the cost method. The following data concerning Parr are available for the years ended December 31, 2002 and 2003:

2002 2003
Net income $30,000 $90,000
Dividend paid None 80,000

In its income statement for the year ended December 31, 2003, how much should Wynn report as income from this investment?
a. $4,500
b. $9,000
c. $12,000
d. $13,500

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